Calculation of gratuity for an employee worked on limited and unlimited contracts

Dear Questioner,

Thank You for contacting me!

Regarding Severance pay, article 132 of UAE labor law states as follows:

A worker who has completed one or more years of continuous service shall be entitled to severance pay at the end of his employment. The days of absence from work without pay shall not be included in calculating the period of service. The severance pay shall be calculated as follows:

1. 21 days' wage for each of the first five years of service.

2. 30 days’ wage for each additional year of service provided always that the aggregate amount of severance pay should not exceed two year's wage.

The above is applicable for both limited and unlimited contracts if the employee has not abandoned the work on his own.

In your case, you were terminated by the employer against some organizational requirements. In that case, your gratuity is calculated as per point no. 1 [21 days], since you have not completed more than 5 years.

Hope my explanation is clear. Please feel free to contact me if you need any further clarification. Thank You.

Regards,

Rajasree Ravivarma